South Korea’s main opposition Democratic Party of Korea, which holds a majority of seats in the country’s 300-member parliament, has officially adopted the impeachment motion against acting president Han Duck-soo as its party policy. Experts and government officials warn that the country’s external credibility will suffer a direct blow if Han is ousted from his role after President Yoon Suk-yeol was impeached for his failed martial law attempt.
If Han is impeached and Deputy Prime Minister and Minister of Economy and Finance Choi Sang-mok takes on the unprecedented role of ‘acting president of an acting president,’ foreign investors who have so far relied on South Korea’s economic fundamentals may decide to withdraw investments. Experts caution that if the acting leadership, currently stabilizing with support from allies such as the United States, collapses, the resulting shock could destabilize both the economy and the political system.
President Yoon’s recent martial law declaration and the subsequent impeachment motion against him by the National Assembly has already cast a shadow over South Korea’s economy.
The stock market was the first to endure losses. In the days leading up to martial law, the KOSPI index stood at 2,500.10. Within four trading days, it plunged 5.6% to 2,360.58. While the index recovered slightly to 2,440.52 on Dec. 24, it has yet to return to pre-martial law levels. Foreign investors have sold over 3 trillion won ($2 billion) worth of Korean stocks during this period, reflecting waning confidence in the country’s corporate sector.
Consumer spending has also sharply declined. Data from Statistics Korea shows that national credit card transactions fell by 26.3% in the week following the martial law declaration. With next year’s economic growth rate already forecast at a modest 1%, experts warn that further political unrest could push this figure even lower.
Experts fear that impeaching acting president Han could trigger a ‘secondary shock’ even more severe than the economic disruptions caused by the martial law declaration. “If Han is suspended, political uncertainty will escalate, and the resulting economic impact will surpass what Deputy Prime Minister Choi can manage by stepping into the acting role,” said Kang Sung-jin, an economics professor at Korea University.
The most immediate concern is South Korea’s sovereign credit rating. Global rating agencies—Moody’s, Fitch, and S&P—are closely monitoring the situation, and a downgrade is increasingly likely if the acting president is impeached. This would mark the first such downgrade since the 1997 Asian financial crisis.
“An impeachment motion against acting president Han is likely to speed up foreign capital outflows, push down stock prices, and shrink investment, leading to an economic contraction,” said Kim Jung-sik, professor emeritus at Yonsei University’s Department of Economics. “Global credit rating agencies may respond by downgrading South Korea’s sovereign credit rating.”
A credit rating downgrade would increase borrowing costs for Korean companies, squeezing their profits, causing stock prices to drop and the Korean won to depreciate even further, creating a vicious cycle of fear that could be difficult to break. “The aftermath of such instability would far exceed what we’ve witnessed so far,” said Seok Byoung-hoon, an economics professor at Ewha Womans University.
If Deputy Prime Minister Choi steps in as acting president, he will simultaneously assume the roles of president, prime minister, and deputy prime minister. This triple burden would inevitably disrupt his primary duty as deputy prime minister—to coordinate economic policy effectively.
“The deputy prime minister oversees key ministries, including the Ministry of Trade and the Ministry of SMEs,” said a senior government official. “Economic policy coordination could suffer significantly if he is forced to focus on foreign affairs and security duties.”
